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When Should an Independent Contractor Sign a Non-Disclosure Agreement?

Updated: May 8

There may be times when your business finds it necessary to hire an independent contractor rather than an employee to complete a certain project, but, like an employee, the independent contractor may become privy to your confidential trade secrets.

This is when you may want to consider an non-disclosure agreement:

There are two basic types of non-disclosure agreements: unilateral and mutual. In the mutual NDA, both parties share confidential information with each other that they each want protected from re-disclosure . For the unilateral agreement, only one party will be sharing the information and taking steps to keep it confidential from competitors and the public.

The purpose of a Non-Disclosure Agreement is to prevent others from revealing your in-house confidential information. The following are some things to be aware of for your NDAs:

  1. Limit the information to that which is truly confidential, and must be kept a secret to protect your business interests. I know it’s tempting to use catch-all phrases and label all that you can as “confidential”, but by doing this you run the risk of creating an unenforceable NDA. Mark your trade secrets as such and include other information that is not generally known to your competitors or in the public domain.

  1. Always take reasonable efforts to maintain the secrecy of your confidential information and trade secrets. If the information isn’t important enough for you to limit its exposure to others who don’t truly need it to perform their tasks, then you’ll have a tough time proving that it’s confidential.

  1. Be careful not to disclose confidential information prior to the other party signing the NDA, and, if this occurs, make sure that your NDA covers any such instance.

  1. Always provide guidance in your NDA regarding what to do if the other party receives a subpoena or other request from the government or law enforcement that compels the release of your confidential information or trade secrets. You may not be able to prevent these types of disclosures but you can certainly make sure that you become aware of them and have an opportunity to provide any valid defenses to disclosure.

As always, I hope this helps!

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